With wireless carriers making the move to no-contract plans, what we know and can predict about smartphone pricing during this Black Friday season is in flux. Gone is the easy-to-predict subsidized phone model, with their "$0 plus a 2-year contract" offers.
Now, shoppers are expected to pay the full price of their smartphone, either upfront, all at once, or in installments over the course of a year or two. The smartphone landscape hasn't just changed; we're on a whole new planet!
Since everything is different going into Black Friday this year, we unable to rely on data from last year to predict this year's phone deals. However, we can make some educated guesses about this year's trends, so here are six things you'll need to know to understand smartphone sales this Black Friday.
1. Get Ready for Sticker Shock
Consumers who were used to looking at subsidized prices will now be looking at unlocked, unsubsidized phone prices, and that's going to be a real shock. Be prepared to stifle a gasp of disbelief when you see that flagship Android devices (like the Samsung Galaxy line) that used to be available for $199 with a 2-year contract, now have a sticker price of $650 or more. Or, even more confusingly, a price of $20 or so per month over 24 months.
With the old subsidized model, shoppers could scoop up high-end phones for $0 to $99 around Black Friday, because carriers were happy to lock you into a 2-year contract, where they charged more per month for the plan because you were secretly paying off that "free" phone you just got. But remember, now that phones are unsubsidized, in theory a shopper has the choice of cheaper service plans that balance out paying for a full-price phone.
With the old subsidized model, shoppers could scoop up high-end phones for $0 to $99 around Black Friday. That won't happen this year.
Ultimately, carriers won't offer free flagship phones anymore because most networks have switched to month-to-month plans and if they offer you a free phone, there's nothing stopping you from taking it and scampering right off to another carrier — one with cheaper monthly rates.
2. Look for Flagship Android Phones for $480
The good news is that, while you won't see those top-of-the-line phones drop to $0, you will still see discounts. Last year, the average discount for flagship Android phones during Black Friday was 26% off; that would drop a $650 phone to about $480.
Yes, that's a hefty $170 in savings, but it sure doesn't look like much, compared to last year's subsidized prices. A year ago, if we'd said the best smartphone deals would be $480, you would have spit out your coffee. This year, you'll have to swallow the new reality.
The average discount for flagship Android phones during Black Friday will be 26% off.
Of course, the wireless carrier will be all too glad to offer you a 24- or 30-month payment plan on that device, so you're back to being "locked" into their service for two years. Clever.
3. Few if Any Deals on Subsidized Phones
Last year, we said that the only good smartphone deals will be on subsidized phones. This year, it's just the opposite: The best deals will only be on unsubsidized phones. Since most carriers want to shift their business model to month-by-month services, it's unlikely that any of them will incentivize customers who want to stay with the old model by offering subsidized deals.
Verizon, for instance, will let current customers stay "grandfathered" in on the their old subsidized plans, but they have little reason to encourage them to remain on that model. And thus, no discounted subsidized phones for Verizon customers. If they do offer current customers a discount on a new subsidized phone, it's unlikely to be a significant discount.
AT&T is a wild card. If there are any free subsidized phones this Black Friday season, they'll probably come from AT&T.
A potential wild card here though will be AT&T. Currently, AT&T is the only carrier that still offers subsidies for both current and new customers. If that still holds come Black Friday, they might take advantage of disgruntled customers looking to jump ship to more comfortable waters. After all, fast-rising T-Mobile is threatening to overtake it in terms of marketshare, and the carrier may see this as an opportunity to grow it's customer base. If there are any free phones this Black Friday season, they'll come from AT&T.
4. Look for Deals That Offer Service Credits
Since you could technically take an unlocked phone anywhere you want, a mobile network's new end-game is to find ways to keep you on their service for as long as possible. The easiest way for them to do this is by dangling freebies and add-ons in front of potential customers.
This Black Friday, in lieu of steep hardware discounts, look for carriers to offer you copious ancillary bonuses. They might waive your first few monthly payments, eliminate service and connection fees, offer free "service upgrades" (like doubling your data, for no extra cost), free 6-month subscriptions to Hulu, Netflix, or Google Play Music, or attach Google Play Store credits. Or they might just offer a plain old cash-back "rebate" for the purchase of a new device.
In lieu of steep hardware discounts, look for carriers to offer free subscriptions, waived fees, or free months of service.
The catch? Many of these "freebies" might come with the stipulation that you stick with the carrier for a predetermined amount of time. For example, you'll get a $300 service credit applied to your bill, when you stay with the nation's' most reliable carrier for six months — and that credit is only applied to your account at the end of those six months. Despite these catches, it's still a good deal.
5. Android Phones Will Still Have a Pricing Advantage Over iPhones
We've talked a lot about flagship Android phones so far, but it should be pointed out that there have always been a wide array of these devices, at price-points for every wallet — even when unlocked and unsubsidized. And thankfully, "cheap" Android phones have been getting great reviews, recently. For instance, the Moto G Smartphone has been praised as the best cheap Android phone and it starts at only $179.99.
These inexpensive Androids won't have the bells and whistles of the latest flagship models, but you won't feel like you've bought a Playskool My First Smartphone, either.
Even crazier, last year's version of this very phone went on sale the week after Cyber Monday, dropping it to $150! Will these inexpensive phones have all the bells and whistles of the latest Droid Turbo Maxx 2 XL S6 (or whatever)? No, but you won't feel like you've bought a Playskool My First Smartphone, either.
So, if you're turned off by the high prices of flagship phones, these cheaper Androids should provide a nice reprieve this Black Friday. Look for modest discounts of about 20% off.
6. Sales Will Still Continue Throughout the Holiday Season
Though it seems like everything about smartphone pricing on Black Friday is changing, the one thing that should remain steady is the timing of these sales since smartphones have become a popular holiday item. As such, merchants will always look to shift more phones throughout the entire season and will offer discounts to mkae that happen.
Last year, we saw big discounts at Amazon in the lead up to Black Friday, then Walmart stepped in with sales during Black Friday, and then Best Buy played mop-up, offering its smartphone deals in the weeks right before Christmas. We're expecting the same distribution of deals from the same places this year, too.
7. iPhone Deals Will Come in All Shapes and Sizes
The iPhone is always a little different from Android phones, because it caters to a completely different audience. It too, however, will be affected by this new phone landscape, but there will still deals. If we do see a subsidized offer, look for the iPhone 6s for as low as $99; last year the iPhone 6 hit that price point on Black Friday week.
If you're looking for deals on an unlocked iPhone 6s, they might not be substantial. Last year, the unlocked iPhone 6 hit $640 on Black Friday, which is a modest $9 off the full price of the phone. We predict you'll see similar deals again this year for the 6s. Alternatively, some retailers may decide to sell the iPhone 6s at its full $649 price, but bundle it with a generous gift card. Back in September Costco offered the first iPhone 6s deal when it sold the unlocked phone at full price, but bundled with a $100 Costco Cash Card.
For more details on iPhone deals, check out our full Apple Black Friday guide.
The New Model Can Actually Be Good for You... Maybe
If all this sounds disheartening, confusing, and strange, remember that this new, unsubsidized world we are being thrust into is actually, technically, better for us. We used to over-pay for our service plans, as carriers would spread out the cost of a phone into our monthly bill to make up the difference of the cost of that $650 phone you thought you only paid $199 (or $0) for. Now, in theory, you're more aware of what you're spending, and you can select different and cheaper plans. Whether it works out that way remains to be seen.
This article first appeared in DealNews.